War Games: The Story of Aid and War in Modern Times by Linda Polman

International aid is a big business. Governments of rich countries spend some $6bn of tax money a year on disaster relief and development aid overseas, while each new earthquake, famine or tidal wave can attract 1,000 aid organisations, from the United Nations Children's Fund and Oxfam to the "Jesus Brigades" of the American south and other charitable adventurers.

The question posed by the Dutch journalist Linda Polman is not whether these "humanitarians" save lives and mitigate suffering. They do. What concerns her in this short book is the unintended consequences of their efforts. By pouring money and goods into devastated regions, foreign aid workers sometimes compound the disruption and debauch the survivors.

That is not simply a matter of the wrong sort of help – such as unsaleable food or the polar tents, court shoes and G-strings sent by one charity to the survivors of the 2004 Asian tsunami. Nor is it the bullying white Land Cruisers triple-parked outside bars and restaurants amid the ruins, or the colossal electricity generators that I remember roaring outside UN villas in the pitch-black streets of the Mansur district of Baghdad before the last war.

Rather, in countries ravaged by both humanitarian catastrophe and civil war, international aid may inflame or prolong the conflict. In a devastated country with no other income, the money spent by aid organisations in rent, per diem payments, taxes to governments or rebel warlords, bodyguards, gasoline, bars, whores and restaurants turns the "aid industry, supposedly neutral and unbiased, into a potentially lethal force the belligerents need to enlist". Even food becomes "a form of arms delivery". Polman gives a case of international NGOs (non-governmental organisations) paying warlords a tax on each child they vaccinate.

She traces this dilemma to the very foundation of modern humanitarianism when Henri Dunant, a Geneva banker, shocked to the core by the bloody battlefield at Solferino in 1859, set up the International Committee of the Red Cross to help all wounded of whatever nation or belligerent status. Florence Nightingale, who believed the welfare of soldiers and civilians was the responsibility of the belligerents, thought Dunant's ideas of neutrality and impartiality – tutti fratelli – were just the sort of nonsense you might expect from "a little state like Geneva, which never can see war".

For Polman, it was the Biafran rebels in 1967, whose leader Colonel Ermeka Ojukwu evidently hired a Geneva public relations firm, who first exploited the boundless charity and innocence of the west. By the 1970s, the UN Relief and Works Agency Palestinian refugee camps in south Lebanon and around Beirut and Tripoli were armed fortresses threatening the very state. Polman discusses the manipulation of the 1984 Ethiopian famine and the Band-Aid concerts by the Dergue in Addis Ababa; the refugee camps at Goma, in what was Zaire in 1994, which allowed the Hutu génocidaires to regroup and continue to exterminate Tutsis; the Iraq oil-for-food programme diverted by Saddam Hussein to maintain the relics of his regime; the millions in taxes paid to the regime in Sudan bent on subjugating Darfur; and finally Afghanistan, where at one estimate 30-40% of aid is misappropriated and a great deal ends up with the Taliban.

The book has marvellous accounts of the Goma camps, theatres of charity by day and strategic garrisons at night, and the Murray Town camp in Freetown, where, in 2002, children who had suffered amputations by the rebels were lodged amid heaps of surplus artificial limbs sent from abroad. That account has its climax in an eerie interview with Mike Lamin, a rebel leader in Makeni dressed as a West Coast rapper, who grumbles, over a jerrycan of palm wine, that he has been blamed rather than praised for hacking off the arms and ears of children. "Without the amputee factor you people wouldn't have come," he says. No doubt.

Liz Waters's English translation carries echoes of the African writings of Evelyn Waugh and Graham Greene and, a little nearer to hand, a tone that is authentically Dutch: cool, brusque, fearless and disillusioned, as one might expect from a country that believes it is long done with colonising.

Yet there are passages altogether more strange and profound, as when Polman describes the war at Murray Town camp between the two classes of amputee – the war-maimed and the surgical – in which the latter are defeated and expelled; or the Sierra Leonean children, labelled orphans and flown to the United States, growing suddenly fat. The book ends with a glossary of "Aid-speak". I liked Polman's article on the word tsunami, "applicable in any desired combination" including, it seems, a philanthropic tsunami or even a tsunami tsunami. What Polman means, I suppose, is that if the aid world spoke more sense, it would make more sense.

Is there an alternative? No, according to the admirable Max Chevalier of Handicap International in Freetown: "Good grief, should we just do nothing at all then?" Well, yes, says Polman, sometimes do nothing at all, rather than just mouth, without thinking, the old Dunantian mantra of independence, neutrality and impartiality. The veil of sentiment must be lifted and aid organisations exposed to criticism and audit. They should not be so prey to charitable fashion, turning a "donor darling" into a "donor orphan" in the course of a single season.

Most perilously, Polman says, humanitarian organisations have allowed themselves to become associated with the armed might of the west. That has had consequences not just for their work but also for the lives of their people, as at the bombing of the UN compound in August 2003 which killed the special representative in Iraq, Sérgio Vieira de Mello, and at least 21 others. Finally, journalists are at fault in converging always on the same sentimental themes, and conspiring with the aid organisations to present a story without corners, on the principle that "If you don't have starving babies you don't get the money".

Pity, it seems, has its uses, but it is no substitute for understanding.

James Buchan's The Gate of Air is published by MacLehose Press.